Sunday, October 06, 2013

If economic times were better VAT would be acceptable?

Several people commenting on VAT have said something to the effect that if the economic times were better using VAT as means of taxation would be acceptable.

I find this statement curious.

Let me see if I understand this correctly.

A policy that could cause more economic disruption in bad times should be delayed until times are better?

It has also been expressed by some people that that the $100 million dollars the government anticipates receiving in additional tax revenue with this new tax will offset the governments deficit spending.

If history is our guide we can examine any year of government spending and see that they have never reduced spending when they received more revenue. Or shall we say they have never run a surplus no matter what the revenue.

Take 2006 for example. Government revenue that year increased by $173 million yet the government still had a deficit $95 million.